Escrow & Title
At a Minnesota closing, the seller receives a check for less than they expected. The closing agent explains the 'net proceeds' were reduced. Which item would reduce the seller's net proceeds?
AThe buyer's loan amount
BThe seller's share of property taxes paid to the buyer✓ Correct
CThe buyer's earnest money credit
DThe buyer's down payment amount
Explanation
The seller's net proceeds are reduced by their closing costs and credits given to the buyer. Property taxes credited to the buyer (for the seller's portion of the year) reduce the seller's net proceeds because the seller is giving the buyer money at closing to cover their share of taxes.
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Key Terms to Know
Closing Costs
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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